4.4 Market research

Market research: process of collecting, recording and analyzing data about customers, competitors and the market.

Why organizations carry out market research? * To reduce the risks associated with new product launches * To predict future demand changes * To explain patterns in sales of existing products and market trends * To assess the most favored designs, flavors, styles, promotions and packages for a product

Sources of market research data * Primary research: collection of first-hand data that are directly related to a firm’s needs. * Secondary research: collection of data from second-hand sources. * Qualitative research: research into the in-depth motivations behind consumer buying behavior or opinions. * Quantitative research: research that leads to numerical results that can be presented and analyzed.

$Methods of primary research$ * Surveys: detailed studies of a market or geographical area to gather data on attitudes, impressions, opinions and satisfaction levels of products or businesses, by asking a section of the population. * Interviews * Focus groups: groups of people who are asked about their attitude towards a product, service, advertisement or new style of packaging. * Observations * Observational technique: qualitative method of collecting and analyzing information obtained through directly or indirectly watching and observing others in business environments’ e.g. watching consumers walk round a supermarket. * Test marketing: marketing a new product in a geographical region before a full-scale launch.

Sources of secondary data * Market intelligence analysis reports * Academic journals * Government publications * Local libraries and local government offices * Trade organizations * Media reports and specialist publications * Internal company records * The Internet

$Sample size and sampling methods$ * Sample: group of people taking part in a market research survey selected to be representative of the target market overall. * Sampling errors: errors in research caused by using a sample for data collection rather than the whole target population. * Ways of selecting an appropriate sample: * Quota sampling: gathering data from a group chosen out of a specific sub-group, e.g. a researcher might ask 100 individuals between the ages of 20 and 30 years. * Random sampling: every member of the target population has an equal chance of being selected. * Stratified sampling draws a sample from a specified sub-group or segment of the population and uses random sampling to select an appropriate number from each stratum. * Cluster sampling: using one or a number of specific groups to draw samples from and not selecting from the whole population, e.g. using one town or region. * Snowball sampling: using existing members of a sample study group to recruit further participants through their acquaintances. * Convenience sampling: drawing representative selection of people because of the ease of their volunteering or selecting people because of their availability or easy access.